Jokowi's Plan for Lapindo's Compensation May Cause State Loss

12/12/2018

President Joko “Jokowi” Widodo’s decision to refinance the compensation for Lapindo mud victim would potentially cause a state loss, Economist from the Institute for Development of Economic and Finance Enny Sri Hartati said.

The government, Enny said, would spend Rp781 billion (US$65 million) for the compensation, while the PT Minarak Lapindo Brantas’ asset used as the collateral for the compensation is valued at Rp3.2 trillion (US$266.7 million).

“The depreciation of the asset should be considered, because the value must have decreased,” Enny told Tempo on Sunday, December 21, 2014.

Enny added, the fund taken from the state budget may not be considered as a burden because it was for used for public’s interest.

“But if there’s a potential of state loss, the government could find another way,” Enny added.

President Joko “Jokowi” Widodo decided to refinance 20 percent of the compensation for the people affected by Lapindo mud. However, Public Works and People’s Housing Minister Basuki Hadimuljono will ask the Attorney General’s Office to seize PT Minarak Lapindo’s asset and property.

The government instructed Lapindo to repay the compensation to the government within four years. Should Lapindo fail to repay the fund within the given period, the government will seize 100 percent of Lapindo’s asset in the affected areas.

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Jokowi's Plan for Lapindo's Compensation May Cause State Loss